ABC of $50MM International Textile Recycler

The Bottom Line:

As Assignee in the Assignment for the Benefit of Creditors (“ABC”) of a $50MM international textile recycling company, Stapleton Group delivered a favorable outcome for the lender, recovering over $2 million, by:

• Engaging critical personnel and former management to assist with vendor negotiations and stringent expense management;
• Vigilant A/R management to generate strong collections and cash flow for the ABC estate;
• Identifying and pursuing miscellaneous assets for recovery; and
• Negotiating payment plans to release critical assets of the estate for future sale and recovery.

The Business Issue:

The private equity-backed, 50-year-old international textile recycling company, with operations in the U.S. and Central America, had become illiquid due to substantial increases in freight costs and a poor product mix from a new key supplier. It was out of compliance with certain loan covenants and lacked cash-on-hand to pay creditor obligations.

Genesis of Stapleton’s Engagement:   

A Chief Restructuring Officer had been retained by the company’s private equity sponsor to help restructure the business. After the successful sale of the company’s primary operating facilities, its Board of Directors opted to wind-down operations through an ABC, with Stapleton as Assignee.

Obstacles and Stapleton’s Solutions:

• Significant accounts receivable on the company’s books without a collections plan.
  • Stapleton established contact with critical customers, diligently monitored collections, and preserved the company’s prior banking outlets to ensure successful payment on outstanding receivables.

• After the sale of the company’s operating facilities amongst other drastic operational changes, the company lacked a realistic budget and projected recovery for its lender.
  • Stapleton worked with management and former employees to refine an aggressive operating budget, establishing incentives for key personnel to produce a favorable result for the lender.
  • Stapleton held frequent meetings with the senior secured lender to modify budgets as needed, exceeding initial expectations.
  • Stapleton managed accounting and treasury functions to ensure adequate cash controls and visibility to financial outcomes.

Contact Jake DiIorio at (213) 235-0609 or Cooper Plyler at (213) 235-0610 for more information.

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